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Saturday, March 15, 2008

AOL Buying No. 3 Social Networking Site

Slashdot It! Bebo lacks the hundred million friends of MySpace and the charmed social status of Facebook. But it is the third most popular social networking Web site in the United States and, to the besieged Internet company AOL, it is worth $850 million. AOL, a subsidiary of Time Warner, said Thursday that it would acquire Bebo and integrate the site with its popular AOL Instant Messenger (AIM), jump-starting AOL’s social networking strategy. The chief executive of AOL, Randy Falco, called the deal a game-changer for the company, which has struggled to move from an Internet access business to an advertising-supported model. AOL has spent more than $1 billion to acquire the pieces for an advertising division called Platform A that would probably be used on Bebo. Social networking sites — enabling online connections between friends, family and colleagues — are seen as a growing source of revenue for media companies, although making money has not been easy. The News Corporation purchased MySpace in 2005 for $580 million. Microsoft paid $240 million for 1.6 percent of Facebook in October. Bebo combines the features of Facebook with the focus on media and self-expression of MySpace. The three-year-old site is most prominent in Britain, where the measurement firm comScore recorded 11.4 million unique visitors in January. The site had 4.1 million visitors in the United States, comScore said. More than 40 million Internet users have accounts, Bebo said, a figure that has doubled in the last year as the company has moved aggressively to add local-language sites. The AOL relationship could help expand its user base. “We have a real opportunity for people to discover Bebo in the U.S. now,” the president of Bebo, Joanna Shields, said. Ms. Shields was hired from Google in January 2007 to broaden the audience and the content offerings. Bebo’s co-founders, the husband and wife team of Michael and Xochi Birch, are cashing out of the company. AOL’s previous efforts at social networking have mostly floundered, and the Bebo acquisition will present a new opportunity to add some community functions to an instant messaging platform. As AOL has searched for a growth strategy, one big question has been what to do about the instant messaging system, which allows anyone on any computer to send and receive short messages. Even as AOL’s Internet access service has declined, AIM has remained the pre-eminent I.M. system in the United States, fending off Microsoft, Yahoo and Google. David Liu, the senior vice president for social media, messaging and home pages at AOL, called buddy lists the “intentional social network,” made up of friends and colleagues whom users chat with on their computers. Mr. Liu said AIM is used by almost 30 million unique visitors a month, mostly in the United States Another messaging system, ICQ, receives a comparable amount of users, mostly internationally. Charlene Li, an analyst for Forrester Research, suggested that social networks would increasingly become integrated into all online experiences. “Most social networking sites already have I.M.-like capabilities built into them, but the reverse isn’t true,” Ms. Li wrote Thursday. “And yet, the buddy list of services like AIM reflect very well a key part of my social graph — the people with whom I communicate with in a very intimate, frequent manner.” Bebo, which calls itself a “social media network” with emphasis on “media,” may also add value to AOL through its partnerships. In November, Bebo removed the barriers for companies to bring video clips and other content onto the site, giving an unusual amount of control to the media owners and only taking a cut of revenue if it assists with promotion. The strategy acted like a “giant magnet,” Ms. Shields said, to attract music labels, television networks and Web video companies. Bebo is also the host of a popular Web video series, KateModern, which averaged more than 1.5 million views each week of its first season. Within Bebo, users can watch the short episodes, interact with characters and solve show-related puzzles. Time Warner shares fell 25 cents Thursday, to close at $14.51. Get Daily Updates via Email Protect your computer with Windows Onecare Get paid $7.50 for reviewing my post Ad Space

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